Contract Law
Question Bank
Course Introduction
Contract Law is a foundational course that explores the principles and rules governing the creation, enforcement, and interpretation of legally binding agreements. Students will examine the essential elements required to form a valid contract, including offer, acceptance, consideration, intention to create legal relations, and capacity. The course also covers contractual terms, vitiating factors such as misrepresentation and duress, breach of contract, and remedies available to parties when a contract is broken. Through case studies and practical examples, students will develop an understanding of how contract law is applied in both personal and commercial contexts, gaining skills necessary for legal analysis and problem-solving.
Recommended Textbook
Contemporary Business Law 8th Edition by Henry R. Cheeseman
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4106 Verified Questions
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Chapter 1: Legal Heritage and the Digital Age
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Sample Questions
Q1) What is considered as the "supreme law of the land" in the United States?
A) Judicial decisions issued by the state courts.
B) The Constitution of the United States of America.
C) The federal statutes passed by the United States Congress.
D) Executive orders passed by the President.
Answer: B
Q2) According to the priority of law in the United States,which of the following statements is true?
A) State regulations take precedence over state statutes.
B) Valid state laws take precedence over any conflicting federal laws.
C) Valid state laws take precedence over local laws.
D) State laws take precedence over the U.S. Constitution within that state.
Answer: C
Q3) The Critical Legal Studies School of jurisprudence believes that legal disputes should be solved by applying arbitrary rules.
A)True
B)False
Answer: True
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3
Chapter 2: Constitutional Law for Business and E-commerce
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Q1) The ________ was a document that restricted the newly created U.S.federal government from levying and collecting taxes,regulating commerce with foreign countries,and regulating interstate commerce.
A) U.S. Constitution
B) Declaration of Independence
C) Bill of Rights
D) Articles of Confederation
Answer: D
Q2) Which of the following statements is true of the executive branch of the federal government?
A) It provides for the election of the president based on popularity.
B) It provides for the election of the president who is selected by the Electoral College.
C) It provides for the appointment of representatives of the Electoral College who are selected by the citizens of the state.
D) It provides for the establishment of the U.S. Supreme Court and the interpretation of the U.S. Constitution and federal law.
Answer: B
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Chapter 3: Courts and Jurisdiction
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Q1) How does a court obtain an in personam jurisdiction over the parties to a lawsuit?
Answer: A court's jurisdiction over a person is called in personam jurisdiction,or personal jurisdiction.A plaintiff,by filing a lawsuit with a court,gives the court in personam jurisdiction over himself or herself.The court must also have in personam jurisdiction over the defendant,which is usually obtained by having a summons served to that person within the territorial boundaries of the state (i.e.,service of process).Service of process is usually accomplished by personal service of the summons and complaint on the defendant.
If personal service is not possible,alternative forms of notice,such as mailing of the summons or publication of a notice in a newspaper,may be permitted.A corporation is subject to personal jurisdiction in the state in which it is incorporated,has its principal office,or is doing business.
A party who disputes the jurisdiction of a court can make a special appearance in that court to argue against imposition of jurisdiction.Service of process is not permitted during such an appearance.
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Page 5
Chapter 4: Judicial Alternative Administrative and E-Dispute Resolution
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Sample Questions
Q1) A complaint contains a "prayer for relief" for a remedy to be awarded by the court.
A)True
B)False
Q2) In which of the following cases is a default judgment entered?
A) when a defendant admits all the allegations in the complaint
B) when there is insufficient evidence to resolve the dispute
C) when the court believes that the lawsuit can be settled before/without trial
D) when a defendant does not file a written response to a plaintiff's complaint
Q3) Appellate courts usually permit a brief oral argument at which each party's attorney is heard.
A)True
B)False
Q4) Negotiation may take place either before a lawsuit is filed,after a lawsuit is filed,or before other forms of alternative dispute resolution are used.
A)True
B)False
Q5) What is the procedure to be adopted by a party to initiate a lawsuit?
Page 6
Q6) Why does a class action occur? How does one maintain a class action lawsuit?
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Chapter 5: Intentional Torts and Negligence
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Q1) The plaintiff in a product liability lawsuit has suffered $100,000 worth of damages from an automobile accident.A defect in manufacture of the plaintiff's vehicle is found to be 35 percent responsible for the accident,while the plaintiff's own negligence is 65 percent responsible.Under the doctrine of partial comparative negligence,how much would the defendant-the manufacturer of the vehicle-have to pay the plaintiff in damages?
A) $60,000
B) $40,000
C) $100,000
D) The defendant would not have to pay any amount in damages.
Q2) A malicious prosecution arises when the plaintiff from a previous lawsuit becomes the defendant and vice versa.
A)True
B)False
Q3) An event for which a defendant is not responsible is called a foreseeable event.
A)True
B)False
Q4) Compare and contrast between reasonable person standard and reasonable professional standard.
Q5) Discuss the nuances behind actual causes and proximate causes of negligence.
Page 7
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Chapter 6: Criminal Law and Cyber Crimes
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Q1) During plea bargain negotiations,the accused admits to a lesser crime than charged in exchange for a lesser sentence.
A)True
B)False
Q2) ________ include environmental laws,securities laws,and antitrust laws and provide for criminal violations and penalties.
A) Regulatory statutes
B) Penal codes
C) Charters
D) Codicils
Q3) A nolo contendere plea involves the accused admitting guilt to all charges.
A)True
B)False
Q4) Nonintent crimes are often imposed for reckless or grossly negligent conduct that causes injury to another person.
A)True
B)False
Q5) Explain how the RICO Act is used against organized crime.
Q6) Discuss how the Money Laundering Control Act works.
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Chapter 7: Intellectual Property and Cyber Piracy
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Q1) State patent law is exclusive;there are no federal patent laws.
A)True
B)False
Q2) After careful deliberation,the U.S.Patent and Trademark Office (PTO)categorically concluded that a proposed invention is novel,useful,and nonobvious.Which of the following courses of action will the PTO undertake next as part of its evaluation process?
A) Reject the patent application for the invention.
B) Approve the patent application for the invention.
C) Assign a patent number for the invention and affix the word "patent" on the patented article.
D) Retract patent number for the invention and affix the word "patent" on the patented article.
Q3) Which of the following intellectual properties is protected by the Lanham Act?
A) trademark
B) trade secret
C) copyright
D) patent
Q4) Can encryption and its legal enforcement keep up with digital piracy?
Q5) Explain the origin of generic names with an example.
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Chapter 8: Ethics and Social Responsibility of Business
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Q1) Which of the following is a criticism of ethical relativism theory?
A) It treats morality as if it were an impersonal mathematical calculation.
B) It doesn't set any universal rules to guide a person's conduct.
C) It doesn't consider the fact that people would not want to maximize benefits for the least advantaged persons.
D) It only assigns people in advantageous positions with the responsibility of setting up rules on morality.
Q2) Ethical relativism establishes ethical rules based on an implied social contract people have with each other.
A)True
B)False
Q3) Which of the following moral theories would closely follow the categorical imperative "Do unto others as you would have them do unto you"?
A) Kantian ethics
B) moral relativism
C) utilitarianism
D) Rawls's social justice theory
Q4) Explain moral minimum theory with an example.
Q5) Discuss the major criticism against ethical fundamentalism.
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Chapter 9: Nature of Traditional and E-Contracts
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Q1) Which of the following pairs of terms describes the same concept or situation?
A) implied-in-law contract and implied-in-fact contract
B) implied-in-law contract and quasi-contract
C) implied-in-fact contract and quasi-contract
D) formal contract and implied-in-law contract
Q2) According to the Restatement (Second)of Contracts: "A contract is a promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty."
A)True
B)False
Q3) Which of the following is required of a contract for it to be considered an express contract?
A) It must be either oral or written.
B) It must be implied-in-law.
C) It must be voidable.
D) It must always be in writing to be enforceable.
Q4) What is the importance of quasi-contracts?
Q5) Personal property and the provision of services do not qualify as consideration.
A)True
B)False
Page 11
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Chapter 10: Agreement and Consideration
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Q1) Dean Campenella is a detective with the California state police.During the investigation of a missing child,Campenella found new clues that led to the capture of a serial killer involved in another case.Since Campenella was not involved in the serial killer case and found the clues while investigating another case,Campenella demanded a special reward from the state police department for helping catch the killer.But his demand was declined citing lack of consideration.Campenella's demand lacks consideration under ________.
A) preexisting duty
B) illegal consideration
C) gift promise
D) illusory promise
Q2) A promise based on the past performance of the promisee lacks consideration.
A)True
B)False
Q3) Mutual assent is not required for a contract to exist.
A)True
B)False
Q4) What are the prerequisites for an offeree to be entitled to collect a reward? Provide an example.
Q5) Analyze the requirements of a consideration.
Page 12
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Chapter 11: Capacity and Legality
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Q1) The objective cognitive "understanding" test is used to determine ________.
A) duty of restoration
B) legal intoxication
C) legal insanity
D) duty of restitution
Q2) Usury laws set a lower limit on the interest rate that can be charged on certain types of loans.
A)True
B)False
Q3) Disaffirmance may be conveyed orally or by the minor's conduct.
A)True
B)False
Q4) Which of the following elements has to be proved for a contract to be deemed unconscionable?
A) that the weaker party did not enter the contract under duress
B) that the parties had equal bargaining power
C) that the dominant party justly used its bargaining power
D) that the adhering party had no reasonable alternative
Q5) Explain the concept of usury laws with an example.
Q6) Explain,in brief,the concept of "necessaries of life."
Page 13
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Chapter 12: Genuineness of Assent and Statute of Frauds
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Q1) Jonas enters into an oral contract with Chelsea to lease his house to her for $100,000.Chelsea pays him $100,000 and moves in.A month later,Jonas learns that his state requires contracts for the lease of goods with payments of $1,000 or more to be in writing.Which of the following options does either party have?
A) Jonas can evict Chelsea as the contract does not comply with the Statute of Frauds and is hence void.
B) Neither Jonas nor Chelsea can rescind the contract as it has already been executed. C) Chelsea can rescind the contract on the grounds of noncompliance with the Statute of Frauds.
D) Jonas can rescind the contract on the grounds of noncompliance with the Statute of Frauds.
Q2) Fraud by concealment occurs when one party takes specific action to conceal a material fact from another party.
A)True
B)False
Q3) Discuss with examples the difference between mutual mistake of a material fact and mutual mistake of value.
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Page 14
Chapter 13: Third-Party Rights and Discharge
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Q1) ________ refers to a condition whose occurrence or nonoccurrence of a specific event automatically excuses the performance of an existing contractual duty to perform.
A) Condition precedent
B) Condition subsequent
C) Concurrent condition
D) Implied condition
Q2) If an obligor continues to make payments to an assignor in spite of receiving notice from an assignee,________.
A) the assignee is liable to the assignor for nonperformance
B) the assignee can sue the obligor for recovery
C) the assignor loses his or her right to performance from the obligor
D) the assignee can recover payment from both the assignor and the obligor
Q3) Compare and contrast between contract provisions that are conditions and contract provisions that are covenants.
Q4) Among the parties to a contract,the ________ is the debtor.
A) obligee
B) obligor
C) assignor
D) assignee
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Chapter 14: Breach of Contract and Remedies
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Q1) ________ is a nonjudicial,private resolution of a contract dispute.
A) Arbitration
B) Reformation
C) Injunction
D) Rescission
Q2) Which of the following terms refers to an unconditional and absolute offer by a contracting party to perform his or her obligations under a contract?
A) injunction
B) writ of garnishment
C) tender of performance
D) pro forma
Q3) An anticipatory breach of contract excuses the nonbreaching party from mitigating damages.
A)True
B)False
Q4) To be liable for consequential damages,the breaching party must ________.
A) be placed with a duty to make reasonable efforts to mitigate damages
B) have not caused any monetary damages to the nonbreaching party
C) provide a disclaimer of foreseeable consequential damages
D) know that the breach will cause special damages to the other party
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Chapter 15: Digital Law and E-Commerce
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Q1) Which of the following is a country-specific domain name?
A) .ca
B) .com
C) .net
D) .info
Q2) While the trademark law protects registered trademarks,why was it inefficient against cybersquatting?
Q3) Obtaining a new top-level domain name for an organization involves ________.
A) high costs
B) free maintenance
C) informal processes
D) short waiting periods
Q4) Counteroffers against electronic agents that do not have the ability to evaluate the offer cannot be enforced.
A)True
B)False
Q5) The original owners of trademarked names can recover the domain names registered by cybersquatters.
A)True
B)False
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Chapter 16: Formation of Sales and Lease Contracts
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Q1) In which of the following situations involving oral contracts can the Statute of Frauds be raised?
A) if a written confirmation has not been objected by a party in an oral agreement
B) if the seller of specially manufactured goods has made a commitment for their procurement
C) if the party against whom enforcement of an oral contract is sought has not admitted in pleadings in court of such a contract
D) if a contract that requires written confirmation has been agreed orally
Q2) Is an oral modification to a contract enforceable? Explain with an example.
Q3) A written modification to an oral contract is required if the oral modification to the contract ________.
A) has been performed to an extent
B) is within the Statutes of Frauds
C) involves specially manufactured goods
D) is worth less than $500 in costs
Q4) The shipment of conforming goods signals an acceptance of a buyer's offer.
A)True
B)False
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Page 18
Chapter 17: Title to Goods and Risk of Loss
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Q1) Is there a passage of title on the purchase of stolen goods? Explain with an example.
Q2) Fred has 100 tons of stone in a warehouse.Barney agrees to purchase the stone from Fred.The contract states that Barney will pick up the stone directly from the warehouse.Fred delivers a warehouse receipt for the 100 tons of stone to Barney.Before Barney is able to pick up the stone,a tornado sweeps through and destroys the stone.Who has the risk of loss?
A) Fred has the risk of loss because Barney did not pick the stone yet.
B) The warehouse has the risk of loss because Barney did not pick the stone yet.
C) The risk of loss was passed to Barney when he received the warehouse receipt.
D) Fred, the warehouse, and Barney are equally responsible for the risk of loss.
Q3) In a lease transaction,title to the leased goods remains with the ________.
A) lessor
B) lessee
C) seller
D) buyer
Q4) How do the rules for determining passage of title in a shipment contract differ from a destination contract?
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Page 19
Chapter 18: Remedies for Breach of Sales and Lease Contracts
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Q1) Compare the lessee's right to cancel a contract with the lessor's right to cancel a contract.
Q2) A replevin is defined as an action by a lessee to recover scarce goods wrongfully withheld by a lessor.
A)True
B)False
Q3) Pollard entered into a sales contract to purchase a specific Picasso painting from Jenson for $15 million.When Pollard tenders payment,Jenson refuses to sell the painting to the buyer.Which of the following legal rights to remedy can Pollard exercise to retrieve the Picasso painting from Jenson?
A) right to cover
B) right to cure
C) right to obtain specific performance
D) right to withhold delivery
Q4) Noncarrier cases are covered by the Uniform Commercial Code (UCC)under two different types of contracts: shipment contract and destination contract.
A)True
B)False
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Chapter 19: Warranties and Product Liability
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Q1) ________ refers to a statute that requires an injured person to bring an action within a certain number of years from the time that he or she was injured by a defective product.
A) Statute of limitations
B) Statute of frauds
C) Statute of repose
D) Statute of general application
Q2) Wilson,a plumber working for Fastfix Repairs,is hired by John to install a radiator manufactured by Multilever Machines.After the installation,the radiator fails to work due to a defective internal component.Under the doctrine of comparative negligence,which of the following parties is liable for the radiator's failure?
A) Wilson
B) John
C) Multilever Machines
D) Fastfix Repairs
Q3) Examine the role of punitive damages in contract law.
Q4) Implied warranties of quality cannot be disclaimed.
A)True
B)False
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Chapter 20: Creation and Transfer of Negotiable Instruments
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Q1) The transfer of a negotiable instrument by a person other than the issuer is known as
A) negotiation
B) assignment
C) indorsement
D) insurance
Q2) Compare and contrast qualified and unqualified indorsements.
Q3) Which of the following can be claimed by merely having possession of the instrument?
A) a certificate of deposit
B) an allonge
C) an order instrument
D) a bearer instrument
Q4) An indorsement that contains the signature of an indorser and specifies a person to whom the indorser intends the instrument to be payable is known as a(n)________.
A) qualified indorsement
B) unqualified indorsement
C) blank indorsement
D) special indorsement
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Chapter 21: Holder in Due Course and Liability of Parties
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Q1) A(n)________ defense is a type of defense that can be raised against enforcement of a negotiable instrument by an ordinary holder,but not against an HDC.
A) discharge in bankruptcy
B) extreme duress
C) personal
D) universal
Q2) Martin borrows $15,000 from Tom,in the form of a check,and signs a promissory note,promising to pay Tom this amount plus 10 percent interest in one year.Tom indorses the note and negotiates it to Fronston.Fronston indorses the note and negotiates it to Liza.Liza presents the note to Martin for payment when the note is due.Martin refuses to pay the note.Who is secondarily liable to pay Liza?
A) Tom
B) Frontston
C) all liabilities lie with Martin
D) the bank that issued the check to Tom
Q3) Every party that signs a negotiable instrument is primarily liable on the instrument.
A)True
B)False
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23
Chapter 22: Banking System and Electronic Financial Transactions
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Q1) The Federal Bureau of Investigation (FBI)is authorized to investigate forgeries,bank fraud,and other financial crimes.
A)True
B)False
Q2) The bank where the drawer has a checking account and on which a check is drawn is called a depository bank.
A)True
B)False
Q3) A certified check must contain the ________.
A) amount being certified
B) amount in the account certification
C) amount in the account after certification
D) title of the person who owns the bank
Q4) What responsibility do banks and checking account customers have with respect to examining bank statements?
Q5) The Dodd-Frank Wall Street Reform and Consumer Protection Act created the Bureau of Consumer Financial Protection.
A)True
B)False
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Chapter 23: Credit, Real Property Financing, and Secured Transactions
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Q1) Explain surety arrangement with an example.
Q2) ________ is a situation in which the creditor does not have to file a financing statement or take possession of the goods to perfect his or her security interest.
A) Perfection by possession of collateral
B) Perfection by attachment
C) Perfection by claim
D) Perfection without statement
Q3) A(n)________ is a judgment of a court that permits a secured lender to recover other property or income from a defaulting debtor if the collateral is insufficient to repay the unpaid loan.
A) deficiency judgment
B) summary judgment
C) lien release
D) in rem judgment
Q4) How can a creditor perfect a security interest on collateral by physical possession?
Q5) Explain foreclosure sale with an example.
Q6) Analyze the importance of the recording statute in a mortgage transaction.
Q7) Differentiate two-party and three-party secured transaction.
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Chapter 24: Bankruptcy and Reorganization
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Q1) Explain Chapter 11 plan of reorganization.
Q2) Which of the following is a feature of the Helping Families Save Their Home Act of 2009?
A) It prevents debtors from seeking mortgage modification while in an active bankruptcy case.
B) It allows mortgage lenders to file a claim in a bankruptcy case if the lender has failed to comply with the requirements.
C) It states that debtors with total mortgage debt of more than $1,010,000 are not eligible for a Chapter 13.
D) It eliminates the need for prepetition credit counseling before a debtor may file for bankruptcy.
Q3) If the value of the collateral securing the secured loan exceeds the secured interest,the secured creditor is referred to as an undersecured creditor. A)True
B)False
Q4) A reaffirmation agreement must be entered into after discharge is granted. A)True
B)False
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Chapter 25: Agency law
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Q1) Canton has listed his house for sale,but cannot be present to take care of the sale as he needs to go out of town.He intends to give his brother,Stratham,the power of attorney to just make decisions regarding selling of his house while he is gone.What kind of power of attorney should Canton execute?
A) a general power of attorney
B) a special power of attorney
C) a universal power of attorney
D) an implied power of attorney
Q2) In a vicarious liability,a principal is liable owing to his or her employment contract with the negligent agent because the principal was personally at fault.
A)True
B)False
Q3) An agency by ratification occurs when the principal ________.
A) accepts an unauthorized act created by an unauthorized agent
B) accepts an authorized act created by an authorized agent
C) creates the appearance of an agency that in actuality does not exist
D) accepts an act carried out under the implied authority of an agent
Q4) Analyze the duties that an agent owes to a principal.
Q5) Discuss the importance of providing a notice of termination for an agency.
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Chapter 26: Small Business, Entrepreneurship, and Partnerships
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Q1) The change in the relationship of partners in a partnership caused by any partner ceasing to be associated in the carrying on of the business is known as ________.
A) action for an accounting
B) indemnification
C) winding up
D) dissolution
Q2) Which of the following statements is true about partners in a limited partnership?
A) Limited partners actively participate in the management of the partnership concern.
B) General partners are personally liable for debts in the partnership concern.
C) General partners cannot assume the role of limited partners in the partnership concern.
D) Limited partners are restricted to not more than thirty in a partnership concern.
Q3) Why is it a good practice for partners to put their partnership agreement in writing?
Q4) Analyze,in brief,the rights of general partners.
Q5) When does a defective formation occur?
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28
Chapter 27: Corporate Formation and Financing
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Q1) Which of the following must be included in an article of incorporation?
A) The minutes of the first organizational meeting of the board of directors.
B) The number of shares the corporation is authorized to issue.
C) The dissolution terms of the incorporation.
D) The corporate seal must be used in the articles of incorporation.
Q2) Where a foreign corporation is required to qualify to conduct intrastate commerce in a state,it must obtain a certificate of ________ from the state.
A) authority
B) domesticity
C) authenticity
D) autonomy
Q3) Notes can be either unsecured or secured.
A)True
B)False
Q4) Authorized shares that have been sold by a corporation are called unissued shares.
A)True
B)False
Q5) How can a corporation incorporated in one state conduct interstate commerce?
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Chapter 28: Corporate Governance and the Sarbanes-Oxley Act
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Q1) A ________ is an agreement that requires a selling shareholder to offer his or her shares for sale to the other parties to the agreement before selling them to anyone else.
A) proxy
B) buy-and-sell agreement
C) voting trust
D) right of right refusal
Q2) The ________ advocates that a greater than majority of shares constitutes a quorum of the vote of the shareholders.
A) supramajority requirement
B) simple majority rule
C) business judgment rule
D) alter ego doctrine
Q3) Describe the business judgment rule and analyze its importance with an example.
Q4) Which of the following is true of shareholders?
A) They own the corporation whose shares they also own.
B) They can bind the corporation that they own to contracts.
C) They are agents of the corporations they own.
D) They are directors of the corporations they own.
Q5) Discuss the need for outside directors in the board of directors of a company.
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Chapter 29: Corporate Acquisitions and Multinational Corporations
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Q1) Instaworks,Inc.wants to acquire IOK Corp.Instaworks makes a tender offer to the shareholders of IOK to acquire their shares of IOK without the permission of the latter corporation's board of directors.This is an example of a ________.
A) sale of assets
B) share exchange
C) merger
D) hostile tender offer
Q2) A shareholder resolution is best defined as a resolution submitted by ________.
A) a shareholder for a vote of the board of directors
B) the board of directors requiring the reorganization of shares held by shareholders
C) a shareholder for a vote of other shareholders
D) the board of directors requiring the forced liquidation of shares held by shareholders
Q3) A tender offer is an offer that an acquirer makes directly to a target corporation's shareholders in an effort to acquire the target corporation.
A)True
B)False
Q4) Is a hostile tender offer an ethical course of action for a company?
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Chapter 30: Limited Liability Companies and Limited
Liability Partnerships
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Q1) Philip and Deborah form an LLC.Philip contributes $50,000 capital,and Deborah contributes $75,000 capital.They do not have an agreement as to how profits are to be shared.If the LLC makes $100,000 profit in its first year,how will the profit be divided among the members?
A) Philip gets $30,000, and Deborah gets $70,000.
B) Philip gets $50,000, and Deborah gets $50,000.
C) Philip gets $25,000, and Deborah gets $75,000.
D) Philip gets $35,000, and Deborah gets $65,000.
Q2) An LLP must register as a(n)________ in any state in which it wants to conduct its business.
A) C corporation
B) S corporation
C) foreign LLP
D) domestic LLP
Q3) Profits and losses from an LLC do not have to be distributed in the same proportion.
A)True
B)False
Q4) Distinguish between a member-managed LLC and a manager-managed LLC.
Q5) How does duty of care differ from duty of loyalty in an LLC?
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Chapter 31: Franchise and Special Forms of Business
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Q1) In a(n)________ franchise,the franchisor authorizes the franchisee to negotiate and sell franchises on behalf of the franchisor.
A) processing plant
B) chain-style
C) area
D) distributorship
Q2) Which of the following is true of a franchise?
A) The franchisor and franchisee are established as separate legal entities.
B) A franchisee does not need a license to use the franchisor's trademark.
C) The franchisee does not have access to the franchisor's knowledge.
D) A franchise is considered as a joint venture.
Q3) Strategic alliances have the same protection as mergers,joint ventures,or franchising.
A)True
B)False
Q4) Lease fees are payments for any land or equipment leased from the franchisor,billed either as a flat monthly or an annual fee.
A)True
B)False
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Chapter 32: Investor Protection, E-Securities, and Wall Street Reform
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Q1) A(n)________ is an exemption from registration which states that securities transactions not made by an issuer,an underwriter,or a dealer do not have to be registered with the SEC.
A) intrastate offering exemption
B) private placement exemption
C) Regulation A offering
D) nonissuer exemption
Q2) The primary purpose of securities law is to promote full disclosure to investors and to prevent fraud in the issuance and trading of securities.
A)True
B)False
Q3) The purpose of the ________ is to make it easier for start-up companies to raise capital through initial public offerings.
A) JOBS Act
B) STOCKS Act
C) Sarbanes-Oxley Act
D) Insider Trading Sanctions Act
Q4) Explain how the JOBS Act favors non-reporting organizations in selling securities.
Page 34
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Chapter 33: Antitrust Law and Unfair Trade Practices
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Q1) The FTC is exclusively empowered to enforce the FTC Act.
A)True
B)False
Q2) The four largest automobile manufacturers in a country each individually come to a decision to stop purchasing tires from a certain company.In accordance with the ________ doctrine,they cannot be charged with a violation of Section 1 of the Sherman Act.
A) conscious parallelism
B) Noerr
C) Colgate
D) failing company
Q3) The rule of reason is characterized by ________.
A) an automatic violation of Section 1 of the Sherman Act
B) an inherently anticompetitive nature
C) a lack of need for any evidence to deem the restraint unreasonable
D) an evaluation of the company's market share, power, and other facets
Q4) A horizontal merger is a merger that integrates the operations of a supplier and a customer.
A)True
B)False
Page 35
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Chapter 34: Consumer Safety and Environmental Protection
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Q1) A decision of the FTC cannot be appealed to federal court.
A)True
B)False
Q2) The ________ is a federal statute passed in 1990 that requires food manufacturers and processors to provide nutrition information on many foods and prohibits them from making scientifically unsubstantiated health claims.
A) Food, Drug, and Cosmetic Act
B) Health Care and Education Reconciliation Act
C) Nutrition Labeling and Education Act
D) Patient Protection and Affordable Care Act
Q3) The Health Care Reform Act is an amendment of the ________ Act.
A) Consumer Product Safety
B) Patient Protection and Affordable Care
C) Medical Device Amendment
D) Federal Trade Commission
Q4) Under the Resource Conservation and Recovery Act (RCRA),the EPA is authorized to regulate underground storage facilities,such as underground gasoline tanks.
A)True
B)False
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Chapter 35: Labor, Worker Protection, and Immigration Laws
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Q1) Why must a 60-day notice be given to an employer before a strike? How can an employer prevent an impending strike?
Q2) Workers' compensation benefits are usually paid according to preset limits established by statute or regulation.
A)True
B)False
Q3) How do elected unions use union security agreements to attain maximum power?
Q4) Which of the following statements is true of the Taft-Hartley Act?
A) It establishes the right of employees to bargain collectively with employers.
B) It gives employers the right to engage in free-speech efforts against unions.
C) It provides for the equal representation of skilled and unskilled workforce.
D) It gives the president of the United States the right to seek an injunction against a strike.
Q5) A group of employees that a union is seeking to represent is known as a(n)________.
A) combined conciliation unit
B) appropriate mediation unit
C) collective negotiation unit
D) appropriate bargaining unit
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Chapter 36: Equal Opportunity in Employment
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Q1) A(n)________ provides that certain job preferences will be given to members of minority racial and ethnic groups,females,and other protected-class applicants when making employment decisions.
A) retaliation plan
B) affirmative defense
C) affirmative action plan
D) reasonable accommodation plan
Q2) Which of the following terms best describes discrimination against an individual because of the person's nonconformance with sex stereotypes?
A) sex-plus discrimination
B) gender identity discrimination
C) quid pro quo sec discrimination
D) pregnancy discrimination
Q3) The Age Discrimination in Employment Act protects employees who are 40 and older from age discrimination.
A)True
B)False
Q4) How can an individual assert that he or she has been discriminated with disparate treatment by an employer?
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Chapter 37: Personal Property, Bailment, and Insurance
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Q1) Tangible property such as automobiles,furniture,and equipment,and intangible property such as securities,patents,and copyrights are collectively referred to as
A) real property
B) immovable property
C) personal property
D) fixtures
Q2) How does a bailment solely benefit the bailee?
Q3) ________ is a means for persons and businesses to protect themselves against the risk of loss.
A) Abatement
B) Ademption
C) Insurance
D) Easement
Q4) Constructive delivery,or symbolic delivery,is sufficient for delivering a gift to a donee.
A)True
B)False
Q5) Explain bailment with an example.
Q6) Explain gift causa mortis with an example.
Page 39
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Chapter 38: Real Property, Landlord-Tenant Law, and Land Use Regulation
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Q1) A life estate that is measured by the life of a third party is known as ________.
A) estate pour autre vie
B) servient estate
C) community property
D) adverse possession
Q2) A ________ is a situation in which a person holds an interest in another person's property without actually owning any part of the property.
A) present possessory interest
B) future interest
C) reversion
D) nonpossessory interest
Q3) Explain the duties of a tenant toward the landlord.Also,discuss the drawbacks of failing to discharge these duties.
Q4) A tenancy for years terminates at the death of either party.
A)True
B)False
Q5) What are the statutory requirements that an adverse possessor must fulfill in order to obtain title to a real property?
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Chapter 39: Family Law, Wills, and Trusts
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Q1) What is a holographic will?
A) a will that is revoked on behalf of a testator by a legal attorney
B) a will that requires the beneficiary to be the witness of the will
C) a will that is entirely handwritten and signed by the testator
D) a will that is orally declared at a testator's deathbed
Q2) An order of the court that declares that a marriage did not exist is known as a(n)________.
A) divorce
B) arraignment
C) abatement
D) annulment
Q3) What is a codicil?
A) a type of will that cannot be amended once created
B) a separate document that must be executed to amend a will
C) a will that has been attested by the beneficiary of the will
D) a duplicate of a will that is used in case the original is destroyed
Q4) One of the parties to a marriage must be at fault for a court to issue a decree that legally orders a marriage terminated.
A)True
B)False
Page 41
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Chapter 40: Accountants' Duties and Liability
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Q1) Which of the following statements is true of Section 18(a)of the Securities Exchange Act of 1934?
A) A plaintiff can recover damages by filing a negligence case under Section 18(a).
B) A plaintiff in a Section 18(a) action must prove that they relied on the misleading statement and that it affected the price of the security.
C) An accountant is liable even if he or she acted in good faith while making misleading statements of material facts.
D) An accountant is liable even if the plaintiff was aware of the misleading statement when the securities were sold.
Q2) Which of the following statements is true of the Sarbanes-Oxley Act?
A) It requires all audit papers to be retained for at least ten years.
B) It requires the Public Company Accounting Oversight Board to inspect and review registered accounting firms that audit more than 100 public companies once a year.
C) It created the Securities Exchange Committee.
D) It allows a registered public accounting firm to simultaneously provide audit and legal services to a public company.
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Chapter 41: International and World Trade Law
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Q1) Only nations,not individuals or businesses,can have cases decided by the International Court of Justice.
A)True
B)False
Q2) Which of the following statements is true with regard to international law?
A) All legal matters of international importance are prosecuted by a single world court that is responsible for interpreting international law.
B) The enforcement of all international laws is regulated by a unitary world executive branch.
C) There is no single legislative source from which all international laws are created.
D) All countries have to follow the international laws enacted by other countries.
Q3) The World Bank is financed by contributions from developed countries.
A)True
B)False
Q4) What are the strengths of forming regional organizations among countries? Explain using the example of any international regional organization.
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